‘Game changer’: The new work expense you can claim on your tax return

About a fifth of Aussie workers use AI tools in their jobs, and the ATO says these are fair deductions at tax time – as long as they can tick three boxes.

Aussies who use AI tools at work have been given the green light to claim the expense as a tax deduction this financial year.

Premium subscriptions for generative AI tools such as ChatGPT Plus and Midjourney can set workers back hundreds of dollars a year and Australian Taxation Office says if they are being used to earn income, they are fair game as a deduction.

“It depends on individual facts and circumstances,” assistant commissioner Tim Loh said.

“We look at the three golden rules: you have spent the money yourself and not been reimbursed; it must be directly related to earning that income, not private use; and you must have a record to prove (the expense), for example a receipt.”

ATO assistant commissioner Tim Loh. Picture: Supplied

Artificial intelligence, such as chat bots and text-to-image generators, have only become mainstream in the last 12 months, so Mr Loh said the ATO was unsure whether this would be a popular work expense claim.

“We haven’t seen the stats come through but once people start logging tax returns we will get an idea of whether people are claiming those types of expenses,” he said.

ChatGPT Plus, which offers access to a better, faster and more feature-filled version of the free chat bot, is priced at $US22 a month (about $A33 a month).

Meanwhile, popular text-to-image generator, Midjourney, has subscription plans ranging between $US8.80 and $132 a month (about $A12 to $A199).

And there are countless other generative AI tools available to help people work more efficiently.

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In March, a survey of 1000 Australians by Lonergan Research found almost one in five (18 per cent) had used some kind of generative AI tool as part of their job – jumping to about a third (34 per cent) among under-25s.

While these figures have likely increased in recent months as the technology becomes better known, not all users have paid subscriptions.

Pure Public Relations’ Phoebe Netto said ChatGPT had made research more efficient for her team. Picture: Supplied

Pure Public Relations founder Phoebe Netto said her PR firm used the paid version of ChatGPT to improve the efficiency of research, gain a quick understanding of a subject without trawling Google and occasionally in the creation of rough first drafts for content.

“We also use it to synthesise information, remove filler words in transcripts, and support the brainstorming process,” she said.

“Across the whole team, we also use transcription AI tools, and these are a huge boost to productivity.

“These tools used for efficiencies in our work are business expenses that we claim, like we do with subscriptions and software that help us offer our PR services.”

Seaquatix’s Aprille Lim uses AI tools in her business. Picture: Supplied

Sydney business owner Aprille Lim said knowing the cost of AI tools was tax deductible was a “game changer”.

The founder of waterproof bag brand Seaquatix had been considering subscribing to ChatGPT Plus after testing out the free version of the chat bot with her start up.

“After seeing how ChatGPT can streamline my workflow and make things more efficient, I will definitely be doing this for the next financial year,” she said.